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Perth firm’s percentage costs estimate a ‘disclosure failure’, judge says
A Perth law firm pulled into a dispute with a former client over fees was informed of an “insufficient” disclosure in its costs agreement.
Naomi Neilson
Three judges with the Western Australian Supreme Court dismissed an appeal brought by a former client of HHG Legal Group – trading under Australasian Solicitors – who had made a number of allegations of “inadequate costs disclosures” between May and October 2019.
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Although the firm secured a win, Justice John Vaughan took issue with part of its disclosure to the former client. In the agreement, the firm set out that if the other party secured a costs order, HHG would be entitled to recover between 35 and 75 per cent from the client.
Referring to the “upper point” of the estimate, Justice Vaughan said it was “insufficient for compliance … with disclosure agreements”.
“Indeed, if a litigation lawyer lacks the necessary knowledge, skill and experience so as to be capable of providing an estimate of the range of the costs the client may be ordered to pay if the client is unsuccessful in the proposed litigation, the lawyer should be considering whether he or she should be accepting the client’s instructions,” Justice Vaughan said in his written reasons.
In finding this, Justice Vaughan disagreed with the primary judge’s ruling that the percentages were adequate.
However, while it was a “disclosure failure”, it made no “material difference” to the overall argument about the costs disclosure. Justice Vaughan agreed with Justice Sam Vandongen and Justice Debra Mullins that the former client’s appeal should be dismissed.
Justice Vaughan added that in a litigious matter, a client should expect to be informed of an estimate of the range of costs they may be expected to pay if unsuccessful “so that he or she may make an informed decision about proceeding with the litigation”.
“In the circumstances of the present case, the disclosure failure was of lesser weight because the appellant was adequately informed of the applicable general rule that each party to the proceeding is to bear the party’s own costs,” Justice Vaughan said.
The client was successful in one part of the appeal, having argued that HHG had not complied with its disclosure obligation when it informed her it would be seeking an amount of $50,000.
The court was told this was a “substantial change” from the original costs agreement, and while HHG had agreed to provide a “more specific costs estimate”, this had “never been provided”.
Justice Mullins found the primary judge erred in failing to find HHG had not “substantially complied” with its obligation, but the client’s limited success on this ground “does not warrant” the appeal.
Justice Vandongen disagreed with Justice Mullins’ findings on this ground.
